Understanding Tax Terms

If you are a small business owner filing your taxes as a sole proprietor, or you own a C-corporation, understanding flow through entity is important. Given the popularity of this business format, it will drive tax policy in the future. Here is what you need to know. Read article

Tax credits are one of the most powerful ways to lower your income taxes. A tax credit reduces your tax bill dollar for dollar. A tax deduction, on the other hand, only reduces your taxable income, so your benefit is determined by your tax bracket... Read article

In 1986, a tax law was introduced to block parents from transfering investments to their children as a technique to lower their taxes. This law, commonly known as the kiddie tax, ensures that this unearned incomeis taxed at a parent's, usually higher, tax rate. But there is still a tax planning opportunity. Read article

The IRS often sees the transfer of funds as a loan, whether there is a loan agreement or not. This also means there is an implied term and interest payment. When the IRS says a transaction is a loan, what interest rate do they use? Enter AFRs. Here is what you need to know. Read article

The Earned Income Credit is one of the most common ways Americans reduce their tax bill. Yet per the IRS, 1 out of 5 people who could qualify for the credit do not file for it. Here are answers to some common questions. Read article

Too many taxpayers using a home office or having rental property are surprised by their tax bill when they sell their property. A little understood area of the tax code called depreciation recapture is often the culprit. Read article

What is the difference between a Marginal Tax Rate and an Effective Tax rate? Who cares? You might if you add a second job and see some of your tax benefits disappear. Here is what you need to know. Read article

Investments

Determining the value of items on your tax return is always open to interpretation. You do not want that to happen to you during an audit as it can lead to additional tax and penalties. Here are some tips to help defend your Fair Market Value (FMV) determinations. Read article

A big surprise can occur when you see your Social Security Retirement Benefits being subject to income tax. This "tax torpedo" is often triggered by Retirement Account distributions. Are you prepared for this? Read article

If you're going through a divorce, taxes may be the last thing on your mind. But divorce involves many potential tax traps and pitfalls. Here are some things to watch out for. Alimony and child support. Alimony is taxable income to the person who receives it and deductible by the person who pays it,... Read article

The IRS recently announced it is going to conduct automated audits of 1099-K filings against business income. This includes unincorporated small businesses filing Schedule C with their Form 1040. How do you protect yourself from this audit risk? Read article